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Summary of research papers

1. Global dollar glut

USD is international currency so it has privileges.

They can print money to absorb shocks of petroleum price rise and promote growth based

on over consumption. Exporters get increased savings surplus and Current account surplus which leads to USD

comes back to USA as foreign exchange reserves thus keeping real interest rates low.

Alan Greenspans expansionary monetary policy caused USA lose comparative advantage

to E.Asia during those times.

There was a frantic search by USA financial institutions for higher returns domestically and

outside

2. Growing NPAs in Banks: Efficacy of Ratings Accountability & Transparency of Credit Rating

Agencies

Slowdown in the economy is the major cause for rising NPAs.

Rather than using Credit rating agencies rating, banks should strengthen their internal rating

mechanism.

Proactive steps that a bank can take is to stem the problem of increasing level of NPAs and

stressed assets.

Banks need to balance the use of external ratings, as the recent financial crisis has

highlighted the dangers of over dependence on ratings.

3. Financial Inclusion: Which way forward?

Quality of loan of financial institution depends on the health of non financial enterprise

sector.

Data gaps in the financial sector needs to be addressed for the purpose of monitoring.

As we move along the path of stricter and more comprehensive regulation, it is important

not to lose sight of the pricing mechanism, as determined by market forces.

Competitive and transparent pricing of both deposit and loan products has become

important to enhance social welfare.

The global financial crisis has given a greater importance to financial regulation and

emphasised on quality capital so as to safeguard financial stability.

4. Fighting inflation

As prosperity has increased the demand for food, we have needed more food production (or

imports).

Higher agricultural commodity prices should have incentivized farmers to produce

significantly more.

Farmer earnings are being eaten away by higher costs, most important of which is wages.

To limit the rise in rural wages, given that it has to rise relative to other wages to attract

labour into agriculture, wages elsewhere should not rise as much.

5. Non-Banking Finance Companies: Game Changers

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NBFCs are already game changers for instance in micro finance, affordable housing,

second hand vehicle finance, gold loans and infrastructure finance NBFCs are giving

tough competitions to banks

NBFCs can play a vital role going forward in financial inclusion for individuals and

MSMEs

Corporate governance stricture of NBFCs needs to be strengthened. NBFCs can become game changers by providing factoring and bill payment service

which are important for financing working capital.

6. Why is Recent Food Inflation in India so Persistent?

There is substantial wastage of agricultural produce like fruits andvegetables which needs to be minimized by improving the supply chainlogistics and by setting up cold chains and processing facility at producingcenters.

There is need to modify APMC to exempt certain vegetables be kept out

of the requirement of selling through mandi. Contract farming and leasing of farmland can help improve productivity by

employing better technology Welfare benefits through a/c transfer would help in rationalizing food

demand. High interest rate should not choke off supply augmentation plans.